New York Magazine: Slumlords Profit from Bloomberg Homeless Policy

Posted on December 2, 2013 by Patrick Markee

New York Magazine’s scathing investigation of the shady world of for-profit shelter operators highlights another element of Mayor Bloomberg’s failed homeless policy: How Bloomberg’s failure to provide permanent housing to homeless kids and families funneled tens of millions of taxpayer dollars into the pockets of slumlords.

Andrew Rice’s remarkable article, from this week’s New York Magazine, tracks the sordid history of the Podolsky family. For nearly three decades the Podolskys’ bottom-feeding real estate empire has profited enormously from lucrative shelter deals with the NYC Department of Homeless Services – at the same time that the Podolskys threaten to displace low-income tenants and run their buildings like slumlords.

Sadly, we’ve known about the Podolskys for far too long. Indeed, as the New York Magazine article notes, back in the 1980s a State court judge deeded one of their SRO properties to the Coalition after the Podolskys hired “eviction gangs” to terrorize tenants and empty the building. (After years of hard work and investment, we’ve now transformed that property into Coalition Houses, a permanent supportive housing residence for formerly-homeless individuals.)

It is simply scandalous that the City not only continues to do business with the Podolskys and their allies, but has actually expanded that business via the deeply misguided “cluster-site shelter” scheme, in which the City uses low-income apartment buildings as expensive temporary shelter. Indeed, only a few weeks ago we testified at a New York City Council hearing about how “cluster-site shelter” – where nearly one of every four homeless families with children now resides – illustrates the abject failure of Bloomberg administration homeless policy. You can find our testimony here.

Following are some excerpts from Andrew Rice’s New York Magazinearticle, which deserves to be read in its entirety:

During Mayor Bloomberg’s tenure, the homeless population metastasized, reaching a record level of 52,000 in September. There are many possible explanations, including policy decisions, such as the elimination of rental-subsidy programs. But the most compelling one is familiar to all: It’s harder than ever to find an affordable lease in New York. Market-rate rents have risen sharply, even as incomes have shrunk and the number of rent-regulated apartments has declined. (And stabilized units can cost as much as $2,500.) This viselike dynamic has squeezed one out of every 150 New Yorkers onto the streets.

Bloomberg’s critics—including Bill de Blasio—have cited this figure as one of the mayor’s most profound failures. To a few, though, it has represented an opportunity. The city will spend almost $800 million on shelters this year, $200 million more than in 2010, and it relies heavily on outsourced providers. “Any of us can look at the data pretty simply,” said one shelter operator, “and say it’s a growth business.”

…

The Podolsky shelter business has two prongs. There are a dozen or so Manhattan hotels, some of which the Podolskys have owned since the Koch era. Then there is a collection of outer-borough residential buildings that operate as “cluster” sites—basically, apartments rented by the city to house homeless families. The city’s largest shelter cluster encompasses fourteen locations in the Bronx. All but one of the buildings are owned by the Podolskys.

…

Typically, cluster units are mixed into rent-regulated buildings. At 941 Intervale Avenue, a six-story apartment building in the Bronx cluster, news of the impending arrival of the homeless came abruptly one day in 2009, with a superintendent’s knock at the door. “I knew that they were going to throw me out,” tenant Carmen Torres told me later. She could do the math. An unemployed health aide who had lived in the building for decades, she used a Section 8 subsidy to pay the $800 rent on the three-bedroom that she shared with her two children, which was brightened by plastic flowers and a menagerie of caged tropical birds. The city was offering the landlord about four times that for shelter units.

Torres tried to organize her neighbors. The landlord countered with buyout offers and eviction notices. The buyouts started at around $1,000, hardly enough to pay for relocation, but most tenants left, weary of conflict and shoddy maintenance. The elevator broke down so frequently it made the Buildings Department’s list of worst offenders. Torres’s elderly mother fell on the stairs and broke her hip.

“The living situation there was not suitable for any human being,” said Andrew Webster, who arrived at the building on Intervale Avenue in 2010, during his senior year in high school. Garbage was piled to the second floor of the courtyard, and there were giant rats everywhere. But the Websters had no choice about the living situation: They were homeless owing to eviction from a former rental. Shelters are supposed to be for emergency stays, but the family ended up staying for more than two years. Like all the shelter residents, Webster possessed an acute awareness of his economic value. “I know they put a price on us,” he said. “We were $3,200, I believe, $3,200 a month.”

Of course, for much less than that amount, the city could have rented the Websters a modest but decent apartment. In fact, the city’s approach to homelessness used to include rental subsidies for its poor residents, allowing the homeless to jump to the head of the line for federal Section 8 vouchers. But Bloomberg ended the policy, believing that it created an incentive for poor households to enter the shelter system. The administration’s replacement, a short-term subsidy, was eliminated owing to state budget cuts in 2011.

“It’s literally the biggest policy mistake of the Bloomberg administration,” said Patrick Markee, a senior analyst for the Coalition for the Homeless, which opposed the shift from Section 8 vouchers. “It’s the keystone of why family homelessness has exploded.”

The cluster system has been the target of persistent criticism, in part because it appears to create more homeless people. In June 2012, Torres found a letter taped to the door of her apartment saying that her lease was about to be terminated. The letter was written in legalese, but it seemed to say there was a problem with her Section 8 eligibility. Soon afterward, an eviction action was filed in court.

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